Court of Justice of the European Union
24 November 2011, Scarlet vs SABAM, C-70/10

Press statement and FAQ

Today the Court of justice of the European Union ruled that a proposed measure ordering an Internet service provider to install a system of filtering of all electronic communications and blocking certain content in order to protect intellectual property rights was in breach of European law.

This result is hugely important, as it protects the openness of the Internet. The alternative would have been a decision which would ultimately have put all European networks under permanent surveillance and filtering. This would have had major negative consequences for both fundamental rights and the online economy in Europe.

The Belgian collecting society Société belge des auteurs, compositeurs et éditeurs (SABAM) applied for an interim relief against the Internet service provider (ISP) Scarlet Extended SA. SABAM wanted Scarlet to filter all peer-to-peer traffic and block potentially unlawful peer-to-peer communications. SABAM requested the implementation of filtering and blocking for all electronic communications, incoming and outgoing, passing through the services of all technological intermediaries – arguing that the interests of rightsholders were equal to the privacy and communications rights of society in general. The Brussels Court of First Instance had concluded that even though Scarlet could not be held liable for infringements, SABAM’s claim was legitimate and that a filtering system had to be installed. The ISP appealed, and the case was referred to Court of Justice of the European Union.

The Belgian Court asked the Court of Justice, whether a national court may order ISPs to install a filtering and blocking system for all its customers for an unlimited period, in abstracto and as preventive measure under EU law and if this was in line with the Charter of Fundamental Rights.
The Court of Justice of the European Union answered that such a measure is contrary to European legislation and that it violates fundamental rights in particular the right to privacy, freedom of communication and freedom of information. It also breaches ISPs’ right to conduct business.

FAQ

Is this a victory for citizens and Internet freedoms?

Yes.

The fundamental rights value and the economic value of the Internet are due to one key characteristic of the Internet – openness. This ruling preserves this openness for the good of society.

The ruling underlines the importance of an open and neutral internet, an Internet which respects fundamental rights such as the right to privacy, free speech and freedom of information. It will avoid extensive, intrusive and counter-productive monitoring.

Important fundamental rights were at stake: privacy of communications, the right to protection of personal data, freedom of information. The European Court partially bases its decision on the Charter of Fundamental Rights. The European Court stresses the importance of protecting those fundamental rights on the Internet.

This is a very important decision for the maintenance of an acceptable level of protection of civil rights. The ruling is very timely as there is a tendency both in Europe and across the globe to protect intellectual property on a higher level than other fundamental rights.

Why underline the point that the economic interest of the ISPs can overlap with the interests of society?

In its decision, the European judge also emphasises the need to protect the interests of Internet intermediaries. The court sought to balance all of the interests at stake (the interest of the rightsholders, the interests of the ISPs and the interests of citizens), but the judge draws particular attention to the potential economic consequences of monitoring on the Internet intermediaries.

By protecting ISPs, the Court’s ruling is also going to have an impact on the all economy and society. ISPs will indeed not be obliged to interfere with the Internet data flow and thus not be obliged to invest in the implementation of technical measures which would manipulate an essential means of communication. It will therefore protect the capacity to innovate in an open, flexible and simple environment, and preserve a neutral Internet favouring freedom of speech and communication.

What effect does it have on the music industry?

This decision could even have a positive impact on the content industry. The message has been delivered that the content industry must adapt to the Internet rather than seeking to force a re-engineering the Internet. If this lesson has finally been learned this creates a great opportunity for the music industry to adapt its business models to the digital environment.

For far too long, the music industry has fought the wrong battle. Instead of evolving with the digital environment, it has remained wedded to narrow old models in a new world of opportunities. Worse still, instead of building bridges with consumers alienated by years of the failures of the content industry to deliver acceptable prices, acceptable formats and with flexible licences, Internet blocking and filtering reinforce the impression that the content industry and consumers are on opposing sides in a battle.

Instead of offering customers the appropriate services on the Internet, the music industry has been fighting for more monitoring, fewer copyright exceptions and more intrusive enforcement, creating alienation and resentment.

Has the Court banned Internet blocking?

No.

Firstly, because it was not the question asked to the Court, and secondly because the European Court cannot make a ruling on unknown future technologies and developments.

The decision therefore only declares that the level of filtering and blocking that SABAM requested is disproportionate, illegal and unacceptable. SABAM’s demands were asking for measures that were too broad in terms of material and geographic scopes and also regarding the broadness of the people affected and furthermore as there is no time limitation.

The measure requested by SABAM is only incompatible with EU law because it does not meet the legality test set out to enable restriction to fundamental rights, i.e. the criteria of proportionality, necessity and effectiveness.

Furthermore, law should be sufficiently clear, accessible and foreseeable, and it that particular case it was not.

The court did not and logically could not rule out the possibility that filtering and blocking systems would ever, in all circumstances, however narrowly targeted, necessary, effective and proportionate, be illegal.

Does it make Internet a law-free zone?

No.

The opposite is, in fact, the case.
The ruling does not mean that everything is permissible on the Internet. It just sets safeguards to further protect fundamental rights in the digital world. At a time when the Internet governance is slowly slipping toward a lawless Wild West environment with internet intermediaries as the sheriffs, this decision is highly important to re-establish the rule of law in the online world.
Illegal behaviour remain illegal on the Internet, but the liability stays on the shoulders of the person responsible for it and policing remains the responsibility of the state. The alternative is coercion of intermediaries into a policing role which is dangerous, counterproductive and, ultimately, as the Court has ruled today, illegal.

The decision will help find the right balance between the interests of right holders, internet service providers and consumers.

What would the consequences have been if the ruling had favoured SABAM?

If the Court of Justice had ruled in favour of the SABAM approach, the openness and neutrality of the Internet would have been shattered, and Internet’s essential functions would have suffered the consequences of intensive filtering and blocking. Indeed if ISPs were obliged to monitor, it would have caused a profoundly chilling effect on Internet communications – undermining both free speech and online trade.

It would have imposed on ISPs a new obligation with regard to the result to be achieved. The responsibility to enforce intellectual property rights would have largely been delegated to internet companies. The role of Internet intermediaries is to provide the infrastructures and services that allow users to access and use the Internet and not to control and monitor the flows going through the Internet.

The protection of ISPs from unreasonable demands has been key to ensuring the success of the Internet in the European Union and the United States – both for fundamental rights and for the economy. Indeed, the continuing success of US online companies compared with European companies is due in large part to the clearer protections of US companies, although this is currently changing. Therefore if the ruling had been different, the consequences for democracy would have been catastrophic for the open Internet.

Does the ruling say that Internet intermediaries never bear liability?

No.

In fact, the ruling means that existing EU law on Internet intermediaries is not circumvented via a loophole.

The E-Commerce Directive says that ISPs cannot be held liable for information that they do not know is illegal and cannot be held liable unless they carry out generalised monitoring. SABAM sought to use a loophole that would allow the use of an injunction which would cause the ISP to be liable for failing to respect the injunction but not for the content itself – circumventing established EU law.

European legislation contains therefore a neutrality principle and requires Member States not to impose monitoring obligations on Internet access providers.

However, the immunity from ISPs is not absolute. In the EU the e-Commerce Directive (2000/31/EC) gives the framework of ISP liability, and set forth the exemptions of ISP liability – if an ISP is hosting content which is breaking the law and have actual knowledge of this, they can be held liable for it. However, Internet intermediaries do not have control over their customers’ behaviour and the content of their communications and this lack of control must be taken into account by the law.

In simple words, ISP liability is mostly based on the knowledge of their customer’s activity. It means that as long as the ISP is unaware of its customers’ behaviour the ISP is not liable. As the Court has underlined, reasonable diligence does not include extensive monitoring.